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EXHIBIT 10.147
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
ECOGEN INC.
and
KA INVESTMENTS LDC
Dated as of May 12, 1999
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CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
dated as of May 12, 1999, between Ecogen Inc., a Delaware corporation (the
"Company"), and KA Investments LDC, a Cayman Islands corporation (the
"Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase from the Company, shares of the Company's 7%
Series 1999-A Convertible Preferred Stock, par value $.01 per share
(the"Preferred Stock").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED STOCK
1.1 Purchase and Sale. (a) Subject to the terms and conditions set
forth herein, the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company 15,000 shares of the Preferred Stock
(the "Shares").
(b) The Preferred Stock shall have the respective rights,
preferences and privileges set forth in the form of the Certificate of
Designations, Preferences and Rights of 7% Series 1999-A Convertible Preferred
Stock attached hereto as Exhibit A, which shall be approved by the Purchaser and
filed prior to the time of the Closing (as defined below) by the Company with
the Secretary of State of Delaware (the "Certificate of Designations").
For purposes of this Agreement, "Business Day," "Conversion Price,"
"Original Issue Date," "Trading Day" and "Per Share Market Value" shall have the
meanings set forth in the Certificate of Designations.
1.2 Purchase Price. The purchase price per Share shall be $100.00.
1.3 The Closing. (a) The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Paul, Hastings, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, immediately following
the execution hereof or such later date or at such other place as the parties
shall agree. The date of the Closing is hereinafter referred to as the "Closing
Date."
(b) At the Closing, the parties shall deliver or shall cause
to be delivered the following: (i) the Company shall deliver to the Purchaser
(1) a stock certificate representing 15,000 Shares registered in the name of the
Purchaser, (2) a five year common
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stock purchase warrant in the form of Exhibit B (the "Warrant") entitling the
Purchaser to purchase an aggregate of 120,000 shares of the Company's common
stock, $.01 par value per share (the "Common Stock"), at an exercise price equal
to 120% of the Per Share Market Value on the Closing Date, registered in the
name of the Purchaser, (3) the legal opinion of Paul, Hastings, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, outside counsel to the Company, substantially in the form of Exhibit
C, dated the Closing Date, and (4) all other documents, instruments and writings
required to have been delivered at or prior to the Closing Date by the Company
pursuant to this Agreement, including an executed Registration Rights Agreement,
dated the date hereof, between the Company and the Purchaser, in the form of
Exhibit D (the "Registration Rights Agreement"), and the Irrevocable Transfer
Agent Instructions, dated the Closing Date, in the form of Exhibit E, delivered
to and acknowledged by the Company's transfer agent (the "Transfer Agent
Instructions"); and (ii) the Purchaser shall deliver to the Company (1)
$1,500,000 in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose
prior to the Closing Date (the "Purchase Price") less the amounts referred to in
Section 4.1, and (2) all documents, instruments and writings required to have
been delivered at or prior to the Closing Date by the Purchaser pursuant to this
Agreement, including an executed Registration Rights Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization and Qualification. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set forth in
Schedule 2.1(a) (collectively the "Subsidiaries"). Except as set forth in
Schedule 2.1(a), each of the Subsidiaries is an entity, duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the full
corporate power and authority to own and use its properties and assets and to
carry on its business as currently conducted except where the failure to be duly
organized, validly existing or in good standing, as the case may be is not
reasonably likely to, individually or in the aggregate, (x) adversely affect the
legality, validity or enforceability of the Securities (as defined below) or any
of this Agreement, the Certificate of Designations, the Warrant or the
Registration Rights Agreement (collectively, the "Transaction Documents"), (y)
have or result in a material adverse effect on the results of operations,
assets, or condition (financial or otherwise) of the
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Company and the Subsidiaries, taken as a whole, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), being a "Material Adverse
Effect"). Except as set forth in Schedule 2.1(a), each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, is
not reasonably likely to have a Material Adverse Effect.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents, and otherwise to carry out
its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the Company
and, when delivered (or filed, as the case may be) in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate of incorporation, by-laws or other charter documents.
(c) Capitalization. The number of authorized, issued and
outstanding shares of capital stock of the Company is set forth in Schedule
2.1(c). No shares of Common Stock are entitled to preemptive or similar rights,
nor is any holder of the Common Stock entitled to preemptive or similar rights
arising out of any agreement or understanding with the Company by virtue of any
of the Transaction Documents, except as set forth in Schedule 2.1(c). Except as
disclosed in Schedule 2.1(c), there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or, except as a result of the purchase and sale of the Shares and
the Warrant, securities, rights or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire any shares of
Common Stock, or contracts, commitments, understandings, or arrangements by
which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock. To the knowledge of the Company, except as specifically
disclosed in the SEC Documents (as defined below) or Schedule 2.1(c), no Person
or group of related Persons beneficially owns (as determined pursuant to Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) or has the right to acquire by agreement with or by obligation
binding upon the Company beneficial ownership of in excess of 5% of the Common
Stock. A "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint
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venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
(d) Issuance of the Shares and the Warrant. The Shares and the
Warrant are duly authorized, and, when issued and paid for in accordance with
the terms hereof, will be validly issued, fully paid and nonassessable, free and
clear of all liens, encumbrances and rights of first refusal of any kind
(collectively, "Liens"). The Company has on the date hereof and, at all times
while the Shares and the Warrant are outstanding, will maintain an adequate
reserve of duly authorized shares of Common Stock, reserved for issuance to the
holders of the Shares and the Warrant to enable it to perform its conversion,
exercise and other obligations under this Agreement, the Certificate of
Designations and the Warrant. Such number of reserved and available shares of
Common Stock shall be not less than the sum of (i) the number of shares of
Common Stock which would be issuable upon conversion in full of the Shares,
assuming such conversion were effected on the Closing Date or the Filing Date
(as defined in the Registration Rights Agreement), whichever yields a lower
Conversion Price, (ii) the number of shares of Common Stock issuable upon
exercise in full of the Warrant, and (iii) 175% of the number of shares Common
Stock which would be issuable upon conversion of additional Shares issued as
payment of dividends on the Shares (such additional Shares, the "Dividend
Shares"), assuming each Share and Dividend Share is outstanding for two years
and all dividends are paid in the form of Dividend Shares. The shares of Common
Stock issuable upon conversion of the Shares and Dividend Shares and upon
exercise of the Warrant are collectively referred to herein as the "Underlying
Shares." The Shares, the Dividend Shares, the Warrant and the Underlying Shares
are collectively referred to herein as the "Securities." When issued in
accordance with the Certificate of Designations and upon exercise of the
Warrant, in accordance with their respective terms, the Underlying Shares will
be duly authorized, validly issued, fully paid and nonassessable, free and clear
of all Liens.
(e) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), or (ii) subject to
obtaining the consents referred to in Section 2.1(f), conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, credit facility,
indenture or instrument (evidencing a Company debt or otherwise) to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is
subject (including Federal and state securities laws and regulations), or by
which
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any property or asset of the Company is bound or affected, except in the
case of each of clauses (ii) and (iii), as is not reasonably likely to,
individually or in the aggregate, have or result in a Material Adverse Effect.
The business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, are not reasonably likely to have or
result in a Material Adverse Effect.
(f) Consents and Approvals. Except as specifically set forth
in Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other Federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) the filings of the Certificate of Designations with the Secretary of State
of Delaware, (ii) the filing of an initial Registration Statement with the
Securities and Exchange Commission (the "Commission") pursuant to the
Registration Rights Agreement (the "Underlying Securities Registration
Statement"), (iii) the application(s) to the Nasdaq National Market ("NASDAQ")
for the listing of the Underlying Shares with the NASDAQ (and with any other
national securities exchange or market on which the Common Stock is then
listed), (iv) the filing of a Form D with the Commission, and (v) in all other
cases where the failure to obtain such consent, waiver, authorization or order,
or to give such notice or make such filing or registration is not reasonably
likely to have or result in, individually or in the aggregate, a Material
Adverse Effect (together with the consents, waivers, authorizations, orders,
notices and filings referred to in Schedule 2.1(f), the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed
in the SEC Documents, there is no action, suit, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (Federal, state, county, local or foreign) which is
reasonably likely, individually or in the aggregate, to have or result in a
Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived which, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, except, with
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respect to each of (i), (ii) and (iii), as is not reasonably likely,
individually or in the aggregate, to have or result in a Material Adverse
Effect.
(i) Private Offering. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchaser as
contemplated hereby are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). Neither the Company
nor any Person acting on its behalf has taken any action which might subject the
offering, issuance or sale of the Securities to the registration requirements of
the Securities Act.
(j) SEC Documents; Financial Statements. The Company has filed
all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC Documents" and, together with the Schedules to this Agreement the
"Disclosure Materials") on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Documents as
required. The financial statements of the Company included in the SEC Documents
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP")
during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. Since October 31, 1998, except as specifically disclosed in
the SEC Documents, (a) there has been no event, occurrence or development that
has resulted or is reasonably expected to result in a Material Adverse Effect,
(b) the Company has not incurred any liabilities (contingent or otherwise) other
than (x) liabilities incurred in the ordinary course of business consistent with
past practice and (y) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP, (c) the Company has not altered its
method of accounting or the identity of its
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auditors and (d) the Company has not declared or made any payment or
distribution of cash or other property to its stockholders or officers or
directors (other than in compliance with existing Company stock option plans or
other existing plan for the benefit of the Company's employees described in the
SEC Documents) with respect to its capital stock, or purchased, or redeemed (or
made any agreements to purchase or redeem) any shares of its capital stock. The
Company last filed audited financial statements with the Commission on January
15, 1999, and has not received any comments from the Commission in respect
thereof.
(k) Investment Company. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. Except for certain fees payable by the
Company to Jesup & ▇▇▇▇▇▇ Securities Corp., no fees or commissions will be
payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, or bank with respect to the transactions
contemplated by this Agreement. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement. The Company
shall indemnify and hold harmless the Purchaser, its employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and reasonable attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as such fees and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has (i) distributed any offering materials in
connection with the offering and sale of the Securities, or (ii) solicited any
offer to buy or sell the Securities by means of any form of general solicitation
or advertising.
(n) Form S-3 Eligibility. The Company is eligible to register
securities for resale with the Commission under Form S-3 promulgated under the
Securities Act.
(o) Seniority. No class of equity securities of the Company is
senior to the Shares in right of payment, whether upon liquidation or
dissolution, or otherwise.
(p) Patents and Trademarks. The Company has, or has rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights (collectively, the
"Intellectual Property Rights") which the Company reasonably believes are
necessary for use in connection with its business, and which the failure to so
have would have a Material Adverse Effect. To the best knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing
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infringement by another Person of any of the Intellectual Property Rights that
is reasonably likely to have a Material Adverse Effect.
(q) Listing and Maintenance Requirements Compliance. The
Company has not in the two years preceding the date hereof received notice
(written or oral) from NASDAQ or any other stock exchange, market or trading
facility on which the Common Stock is or has been listed (or on which it has
been quoted) to the effect that the Company is not in compliance with respect to
the Common Stock with the listing or maintenance requirements of such exchange
or market. The Company is in compliance with all such maintenance requirements.
(r) Registration Rights; Rights of Participation. Except as
described on Schedule 6(b) to the Registration Rights Agreement, (i) the Company
has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority which has not
been satisfied and (ii) no Person, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.
(s) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
Federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Documents, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect.
(t) Disclosure. The Company confirms that it has not provided
the Purchaser or its agents or counsel with any information that constitutes or
might constitute material non-public information, other than information the
substance of which will be disclosed upon the filing by the Company of its next
Quarterly Report in Form 10-Q or the Underlying Securities Registration
Statement filed by the Company with the Commission pursuant to the Registration
Rights Agreement or which within 60 days from the date hereof will cease to be
material nonpublic information. The Company understands and confirms that the
Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
2.2 Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
(a) Organization: Authority. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to enter into and to
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consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The purchase by the Purchaser
of the Securities hereunder has been duly authorized by all necessary action on
the part of the Purchaser. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Purchaser and constitutes
the valid and legally binding obligation of the Purchaser, enforceable against
it in accordance with its terms.
(b) Investment Intent. The Purchaser is acquiring the
Securities for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof or
interest therein, without prejudice, however, to the Purchaser's right, subject
to the provisions of this Agreement and the Registration Rights Agreement, at
all times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act and in
compliance with applicable state securities laws or under an exemption from such
registration.
(c) Purchaser Status. At the time the Purchaser was offered
the Shares and the Warrant, it was, and at the date hereof, it is, and at each
exercise date under the Warrant, it will be, an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
(d) Experience of the Purchaser. The Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) Ability of the Purchaser to Bear Risk of Investment. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. The Purchaser acknowledges receipt
of the Disclosure Materials and further acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the
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investment and to verify the accuracy and completeness of the information
contained in the Disclosure Materials.
(g) General Solicitation. The Purchaser is not purchasing the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar.
(h) Reliance. The Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser makes
no representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed by the
Purchaser or a subsequent transferee of the Securities pursuant to an effective
registration statement under the Securities Act, to the Company or pursuant to
an available exemption from or in a transaction not subject to the registration
requirements of the Securities Act. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Company, except as otherwise set forth herein, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably satisfactory to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration under the Securities
Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with any transfer agent for the
securities of the Company any transfer of Securities by the Purchaser to an
Affiliate of the Purchaser or to a fund under common management with the
Purchaser, or any transfer among any such Affiliates or funds, provided that
transferee certifies to the Company that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and that it is acquiring the
Securities solely for investment purposes. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
the Purchaser under this Agreement and the Registration Rights Agreement.
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(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
Underlying Shares shall not contain the legend set forth above
nor any other legend if the conversion of Shares and Dividend Shares, exercise
of the Warrant or other issuances of Underlying Shares as contemplated hereby or
by the Certificate of Designations occurs at any time while an Underlying
Securities Registration Statement is effective under the Securities Act or in
the event there is not an effective Underlying Securities Registration Statement
at such time, if in the opinion of counsel to the Company such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company shall cause its counsel to issue the Transfer Agent Instructions to the
Company's transfer agent on the day that the Underlying Securities Registration
Statement is declared effective by the Commission. The Company agrees that it
will provide the Purchaser, upon request, with a certificate or certificates
representing Underlying Shares, free from such legend at such time as such
legend is no longer required hereunder. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions of transfer set forth in this Section.
3.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Underlying Shares upon (i) conversion of the Shares and Dividend
Shares in accordance with the terms of the Certificate of Designations, and (ii)
exercise of the Warrant, may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligation to issue Underlying Shares
upon (x) conversion of the Shares and Dividend Shares in accordance with the
terms of the Certificate of Designations, and (y) exercise of the Warrant, is
unconditional and absolute, subject to the limitations set forth in this
Agreement,
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in the Certificate of Designations or pursuant to the Warrant, regardless of
the effect of any such dilution.
3.3 Furnishing of Information. As long as the Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. As long as the Purchaser owns Securities, if
the Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchaser and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section l3(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell Underlying
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including the legal opinion referenced above in this Section. Upon the
reasonable request of any such Person, the Company shall deliver to such Person
a written certification of a duly authorized officer as to whether it has
complied with such requirements.
3.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify or exempt the issuance and sale of the
Underlying Shares under the securities or Blue Sky laws of such jurisdictions as
the Purchaser may reasonably request and shall continue such qualification or
exemption at all times until the Purchaser notifies the Company in writing that
it no longer owns Securities; provided, however, that neither the Company nor
its Subsidiaries shall be required in connection therewith to qualify as a
foreign corporation where they are not now so qualified or to take any action
that would subject the Company to general service of process in any such
jurisdiction where it is not then required to be so subject or subject the
Company to any material tax in any such jurisdiction where it is not then so
subject.
3.5 Integration. The Company shall not, and shall use its best
efforts to ensure that, no Affiliate shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchaser.
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3.6 Increase in Authorized Shares. At such times as the Company would
be, if a notice of conversion or exercise (as the case may be) were to be
delivered on such date, precluded from (a) converting 175% of the Shares and
Dividend Shares outstanding that remain unconverted at such date, or (b)
honoring the exercise in full of the Warrant due to the unavailability of a
sufficient number of shares of authorized but unissued or reacquired Common
Stock, the Board of Directors of the Company shall promptly (and in any case,
within thirty (30) Business Days from such date) prepare and mail to the
stockholders of the Company proxy materials requesting authorization to amend
the Company's Certificate of Incorporation to increase the number of shares of
Common Stock which the Company is authorized to issue to at least such number of
shares as reasonably requested by the Purchaser in order to provide for such
number of authorized and unissued shares of Common Stock to enable the Company
to comply with its conversion, exercise and reservation of shares obligations as
set forth in this Agreement, the Certificate of Designations and the Warrant
(the sum of (x) the number of then authorized shares of Common Stock, (y) the
number of shares of Common Stock then outstanding plus all shares of Common
Stock issuable upon exercise of all outstanding options, warrants and
convertible instruments, and (z) the sum of (i) 175% of the number of Underlying
Shares as are then issuable upon a conversion in full of all Shares and Dividend
Shares, and (ii) the number of Underlying Shares as are issuable upon exercise
in full of the Warrant, shall be a reasonable number). In connection therewith,
the Board of Directors shall (a) adopt proper resolutions authorizing such
increase, (b) recommend to and otherwise use its best efforts to promptly and
duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the sixtieth (60th) day after
delivery of the proxy materials relating to such meeting) and (c) within five
(5) Business Days of obtaining such stockholder authorization, file an
appropriate amendment to the Company's Certificate of Incorporation to evidence
such increase.
3.7 Listing and Reservation of Underlying Shares. (a) The Company
shall (i) not later than the tenth (10th) day following the Closing Date,
prepare and file with the NASDAQ (as well as any other national securities
exchange or market or trading or quotation facility on which the Common Stock is
then listed) an additional shares listing application covering a number of
shares of Common Stock which is at least equal to the number of shares required
to be reserved pursuant to Section 2.1(d), (ii) take all steps necessary to
cause such shares to be approved for listing on the NASDAQ (as well as on any
other national securities exchange or market or trading or quotation facility on
which the Common Stock is then listed) as soon as possible thereafter, and (iii)
provide to the Purchaser evidence of such listing, and the Company shall
maintain the listing of its Common Stock thereon. If at any time thereafter the
number of Underlying Shares as are issuable upon conversion in full of the then
number of outstanding Shares and Dividend Shares, and upon exercise of the then
unexercised portion of the Warrant, exceeds 85% of the number of Underlying
Shares previously listed on account thereof with NASDAQ (and other required
exchanges), the
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Company shall take the necessary actions to immediately list a number of
Underlying Shares as equal 175% of the number of Underlying Shares then
issuable upon conversion of the Shares and Dividend Shares, and exercise of
the Warrant.
(b) The Company shall maintain a reserve of Common Stock for
issuance upon conversion of the Shares and Dividend Shares, and upon exercise of
the Warrant in accordance with its terms, in such amount as may be required to
perform its obligations in full under the Transaction Documents, which reserve
shall include a number of shares of Common Stock equal to no less than two times
the number of shares of Common Stock as would be issuable upon conversion in
full of the Shares and Dividend Shares, and upon exercise in full of the
Warrant.
3.8 [Intentionally omitted.]
3.9 Conversion Procedures. The Transfer Agent Instructions,
Conversion Notice (as defined in Exhibit A) and Notice of Exercise under the
Warrant set forth the totality of the procedures with respect to the conversion
of the Shares and Dividend Shares and exercise of the Warrant, including the
form of legal opinion, if necessary, that shall be rendered to the Company's
transfer agent and such other information and instructions as may be reasonably
necessary to enable the Purchaser to convert its Shares and Dividend Shares and
exercise the Warrant as contemplated in the Certificate Designations and the
Warrant (as applicable).
3.10 Notice of Breaches. (a) Each of the Company and the Purchaser
shall give prompt written notice to the other of any material breach by it of
any representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained therein to be
incorrect or breached as of the Closing Date. However, no disclosure by either
party pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained in any Transaction
Document.
(b) Notwithstanding the generality of Section 3.10(a), the
Company shall promptly notify the Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated by the Transaction Documents
violates or would violate any written agreement or understanding between such
lender and the Company, and the Company shall promptly furnish by facsimile to
the holders of the Shares a copy of any written statement in support of or
relating to such claim or notice.
3.11 Conversion and Exercise Obligations of the Company. The Company
shall honor conversions of the Shares and Dividend Shares and exercises of the
Warrant and shall
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deliver Underlying Shares in accordance with the respective terms and
conditions and time periods set forth in the Certificate of Designations and
the Warrant.
3.12 Right of First Refusal; Subsequent Registrations. (a) Except as
provided for in Schedule 3.12, the Company shall not, directly or indirectly,
without the prior written consent of the Purchaser, offer, sell, grant any
option to purchase, or otherwise dispose of (or announce any offer, sale, grant
or any option to purchase or other disposition) any of its or its Affiliates'
equity or equity equivalent securities in a transaction intended to be exempt or
not subject to registration under the Securities Act (a "Subsequent Placement")
for a period of 180 days after the Closing Date, except (i) the granting of
options or warrants to employees, officers and directors, and the issuance of
shares upon exercise of options granted, under any stock option plan heretofore
or hereinafter duly adopted by the Company, (ii) shares issued upon exercise of
any currently outstanding warrants and upon conversion of any currently
outstanding convertible security in each case disclosed in Schedule 2.1 (c),
(iii) shares of Common Stock issued upon conversion of the Shares and Dividend
Shares in accordance with the Certificate of Designations, and (iv) shares of
Common Stock issued in connection with a Strategic Transaction (as defined
below); unless (A) the Company delivers to the Purchaser a written notice (the
"Subsequent Placement Notice") of its intention to effect such Subsequent
Placement, which Subsequent Placement Notice shall describe in reasonable detail
the proposed terms of such Subsequent Placement, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Placement shall be
effected, the date on which the Company reasonably expects such Subsequent
Placement to close and attached to which shall be a term sheet or similar
document relating thereto and (B) the Purchaser shall not have notified the
Company by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after
its receipt of the Subsequent Placement Notice of its willingness to cause the
Purchaser to provide (or to cause its sole designee, which must be an affiliate
of the Purchaser, to provide), subject to completion of mutually acceptable
documentation, financing to the Company on substantially the terms set forth in
the Subsequent Placement Notice. If the Purchaser shall fail to notify the
Company of its intention to enter into such negotiations within such time
period, the Company may effect the Subsequent Placement substantially upon the
terms and to the Persons (or Affiliates of such Persons) set forth in the
Subsequent Placement Notice; provided, that the Company shall provide the
Purchaser with a second Subsequent Placement Notice, and the Purchaser shall
again have the right of first refusal set forth above in this paragraph (a), if
the Subsequent Placement subject to the initial Subsequent Placement Notice
shall not have been consummated for any reason on the terms set forth in such
Subsequent Placement Notice within sixty (60) Business Days after the date of
the initial Subsequent Placement Notice with the Person (or an Affiliate of such
Person) identified in the Subsequent Placement Notice. If the Purchaser
exercises its right of first refusal, the closing shall take place at the time
contemplated in the Subsequent Placement Notice, subject to completion of
mutually acceptable documentation, which the parties shall negotiate in good
faith. For purposes of
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this Section 3.12, a "Strategic Transaction" shall mean a transaction or
relationship in which the Company issues Common Stock to an entity which is,
itself or through its subsidiaries, an operating company in a business related
to the business of the Company and in which the Company receives material
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital.
(b) Except for (w) Underlying Shares, (x) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, (y) the
securities listed on Schedule 6(b) to the Registration Rights Agreement, and (z)
Company securities to be registered for resale in connection with actions
permitted pursuant to paragraph (a)(i) through (iv) of this Section, the Company
shall not, without the prior written consent of the Purchaser (i) issue or sell
any of its or any of its Affiliates' equity or equity-equivalent securities
pursuant to Regulation S promulgated under the Securities Act, or (ii) register
for resale any securities of the Company for a period of not less than ninety
(90) Trading Days after the later to occur of (1) the date that an Underlying
Securities Registration Statement is declared effective by the Commission and
(2) the ninetieth (90th) Trading Day after the Closing Date. Any days that the
Purchaser is unable to sell Underlying Shares under an Underlying Securities
Registration Statement shall be added to such 90 Trading Day period.
3.13 Certain Securities Laws Disclosures; Publicity. Pursuant to the
Closing, the Company shall (i) timely file with the Commission a Form D
promulgated under the Securities Act as required under Regulation D promulgated
under the Securities Act and provide a copy thereof to the Purchaser promptly
after the filing thereof, and (ii) file with the Commission a Report on Form 8-K
or, if permitted, Form 10-Q disclosing the transactions contemplated hereby
within ten (10) Business Days after the Closing Date.
3.14 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of Company debt (other than capitalized lease
obligations) or to redeem any Company equity or equity equivalent securities.
Pending application of the proceeds of this placement in the manner permitted
hereby, the Company will invest such proceeds in interest bearing accounts
and/or short-term, investment grade interest bearing securities.
3.15 Reimbursement. If the Purchaser, other than by reason of its
gross negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse the Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in
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connection therewith, as such expenses are incurred. In addition, other than
with respect to any matter in which the Purchaser is a named party, the Company
will pay the Purchaser the charges, as reasonably determined by the Purchaser,
for the time of any officers or employees of the Purchaser devoted to appearing
and preparing to appear as witnesses, assisting in preparation for hearings,
trials or pretrial matters, or otherwise with respect to inquiries, hearings,
trials, and other proceedings relating to the subject matter of this Agreement.
The reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchaser who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchaser and any such Affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Purchaser and any such Affiliate and any such Person. The
Company also agrees that neither the Purchaser nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of the
Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Purchaser or entity in connection with the
transactions contemplated by this Agreement.
3.16 Exclusivity. The Company shall not issue and sell any Shares to
any Person other than the Purchaser except with the specific prior written
consent of the Purchaser.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. On the Closing Date, the Purchase Price shall
be reduced by (i) $94,500 to be paid to Jesup & ▇▇▇▇▇▇ Securities Corp., and
(ii) $6,000 to be paid to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP in
connection with legal fees and expenses relating to the Closing, in each case
directly from the Purchaser. Other than the amounts contemplated in the
immediately prior sentence, and except as otherwise set forth in the
Registration Rights Agreement, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all stamp and
other taxes and duties levied in connection with the issuance of the Securities
pursuant hereto.
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4.2 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement, the
Certificate of Designations and the Warrant contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.
4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via confirmed facsimile at the
facsimile telephone number specified in this Section prior to 8:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile telephone number specified below later than 8:00 p.m.
(New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
If to the Company: Ecogen Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
With copies to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Purchaser: KA Investments LDC
c/o Deephaven Capital Management LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Ivana Bozjak
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With copies to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and the Purchaser; or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. Except as set forth in
Section 3.1(a), the Purchaser may not assign this Agreement or any of the rights
or obligations hereunder without the consent of the Company. This provision
shall not limit the Purchaser's right to transfer securities or transfer or
assign rights hereunder or under the Registration Rights Agreement, each in
accordance with the terms of this Agreement.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
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4.9 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
conversion or exercise (as the case may be) of the Shares, the Dividend Shares
and the Warrant.
4.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Publicity. The Company and the Purchaser shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other party with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Purchaser without the prior written consent of the Purchaser, except to
the extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law, in which case the Company shall provide the
Purchaser with prior notice of such disclosure.
4.12 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
4.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company under
the Transaction Documents. Each of the Company and the Purchaser agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
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IN WITNESS WHEREOF, the parties hereto have caused this
Convertible Preferred Stock Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.
ECOGEN INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chairman and CEO
KA INVESTMENTS LDC
By: /s/ ▇▇▇▇ Sobcjak
-------------------------------
Name: ▇▇▇▇ Sobcjak
Title: Secretary
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SCHEDULE 2.1(a)
SUBSIDIARIES*
State or Other Jurisdiction of
Name of Subsidiary Incorporation or Organization
------------------ ------------------------------
Ecogen-Bio Inc. Delaware
Ecogen Investments Inc. Delaware
Ecogen-Jerusalem Inc. Delaware
Ecogen-Israel Delaware
Ecogen-Technologies I Incorporated Delaware
Ecogen-Bio Germany GmbH Delaware
Ecogen Biotechnologies Israel Ltd. Israel
Ecogen Israel International Inc. Delaware
* All of the subsidiaries listed above are wholly-owned subsidiaries of
Ecogen Inc. with the exception of Ecogen Technologies I Incorporated of
which Ecogen Inc. owns approximately 70% of the outstanding common stock.
The following corporations, all of which were incorporated under the laws
of the state of Delaware, are wholly-owned subsidiaries of Ecogen
Technologies I Incorporated; Ecoresearch Mildew I Inc., Ecoresearch Harvest
Rot II Inc., Ecoresearch Corn Borer III Inc., Ecoresearch Nematodes IV
Inc., Ecoresearch Rootworm V Inc. and Ecoresearch Turf VI Inc.
24
SCHEDULE 2.1(c)
CAPITALIZATION
1. The authorized capital stock of the Company consists of 42,000,000
shares of Common Stock, par value $0.01, and 7,500,000 shares of
Preferred Stock, par value $0.01, the terms of which will be determined
by the Company's Board of Directors as and when such shares are issued.
Of the 7,500,000 shares of Preferred Stock, 35,000 have been designated
Series 1998-A Convertible Preferred Stock, 20,000 have been designated
Series 1998-B Convertible Preferred Stock and 50,000 have been
designated Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇▇ Preferred Stock. As of May 7,
1999, 9,446,901 shares of Common Stock and 32,354 shares of Series
1998-C Convertible Preferred Stock were outstanding.
2. The Convertible Preferred Stock Purchase Agreement, dated as of August
20, 1998, between Ecogen Inc. and United Equities (Commodities)
Company, among other things, provides: (i) United Equities has certain
anti-dilution protections in the event Ecogen issues shares of its
common stock or securities convertible into common stock; and (ii)
United Equities has certain registration rights.
3. As of May 7, 1999, the Company had outstanding options to purchase up
to 422,210 shares of the Company's Common Stock pursuant to the terms
of the Company's 1987 Stock Option Plan (the "1987 Plan"). No grants of
stock options have been made under the 1987 Plan since July 31, 1998.
As of May 7, 1999, the Company had outstanding options to purchase up
to 675,000 shares of the Company's Common Stock pursuant to the terms
of the Company's 1998 Stock Option Plan (the "1998 Plan"). No
additional stock options will be granted under the 1998 Plan. As of May
7, 1999, the Company had outstanding options to purchase up to 650,000
shares of the Company's Common Stock pursuant to the terms of the
Company's 1999 Stock Option Plan (the "1999 Plan"). Up to 850,000
shares of the Company's Common Stock are available for issuance in
connection with options to be granted under the 1999 Plan. As of May 7,
1999, the Company had outstanding warrants and options (exclusive of
options issued under the 1987 Plan, the 1998 Plan and the 1999 Plan) to
purchase up to 316,121 shares of the Company's Common Stock.
4. Convertible securities held by KA Investments.
5. In connection with Ecogen's Amended and Restated Convertible Preferred
Stock Purchase Agreement with KA Investments, Jesup & ▇▇▇▇▇▇ Securities
Corp. received 24,000 shares of Common Stock and will be entitled to
receive an additional
25
20,000 shares of Common Stock on the Closing Date. Jesup & ▇▇▇▇▇▇ have
certain registration rights with respect to the additional 20,000
shares of Common Stock.
6. Investment Agreement, dated as of January 24, 1996, between Ecogen Inc.
and Monsanto Company, among other things, provides: (i) Monsanto has a
right of first refusal in the event Ecogen sells shares of its common
stock or other voting securities; and (ii) certain registration rights.
26
SCHEDULE 2.1(f)
CONSENTS AND APPROVALS
Monsanto Company (which has been obtained)
United Equities (Commodities) Company (which has been obtained)
27
SCHEDULE 3.12
SUBSEQUENT FINANCINGS
In connection with Ecogen's Amended and Restated Convertible Preferred Stock
Purchase Agreement with KA Investments, Jesup & ▇▇▇▇▇▇ Securities Corp. received
24,000 shares of Common Stock and will be entitled to receive an additional
20,000 shares of Common Stock on the Closing Date. Jesup & ▇▇▇▇▇▇ have certain
registration rights with respect to the additional 20,000 shares of Common
Stock.